Insolvency and Recoveries

This recession has brought with it an increase in the number of insolvencies; however, the value of each insolvency has been smaller. This is primarily related to the sharp decrease in asset value and a shortage in new investment. The low interest rates have ensured the cost of borrowing is manageable and that, therefore, payments have continued to be made to banks providing them with an acceptable level of cash flow. This coupled with a decrease in the value of assets means the banks currently have little incentive to force more companies into administration.

The financial climate isn't going to change dramatically for the foreseeable future. In this environment companies need to have both a sense of realism and an understanding of the importance of taking the right action at the right time in order to protect the position of creditors and directors.

Why we are different

Our our experience in restructuring and deal making enables us to offer simple and sound advice not just to those facing imminent insolvency but also to those wishing to take proactive measures to capitalise on opportunities arising out of this downturn.

Acting either for insolvency practitioners or businesses involved in the insolvency process, our key strength is our ability to leverage our extensive network of contacts to combine all of the required resources together. The banking consultants, private investigators and insolvency practitioners we work with assist us in an advisory capacity. This enables us to take an independent approach to finding the best resolution to the client’s situation.

Services

  • Administration including sales and purchases of insolvent businesses
  • Bankruptcy
  • Liquidation
  • Voluntary arrangements
  • Debt recovery
  • Directors' duties
  • Dispute resolution
  • Asset freezing and other injunctive relief
  • Fraud claims
  • Investigations
  • Security advice

Experience

  • We currently act for a major foreign corporate funder who made a substantial investment in a special purpose company, part externally secured, for the purpose of developing a landmark site in central London. Law of Property Act Receivers have been appointed over the assets of the SPV. We are advising on the funder's security interests and on its rights and remedies in relation to possible recoveries and dealing with the LPA Receivers with a view to negotiating a work out.
  • We were involved in the first reported case which dealt with the construction of s.283A of the Insolvency Act 1986. The case came about because we had sought to find a creative solution for our creditor client who, faced with a trustee unwilling to pursue his interest in a matrimonial home had taken matters into its own hands by seeking an assignment of the trustee's interest. Although successful in the High Court the Court of Appeal found that the terms of the assignment fell outside the scope of s.283A and thereby the interest in the matrimonial home had re-vested in the bankrupt notwithstanding the assignment. The important clarification of the law has already assisted us in advising other clients faced with this problem in a market place where trustees are increasingly unwilling to act.
  • We are regularly instructed in relation to the enforcement of factoring facilities. We get involved from the outset when our client, the factoring company, asks for advice regarding their failing client. We may then act in relation to the appointment of administrators pursuant to the factoring company's qualifying floating charge which it holds over the client company's fixed and floating assets. We often then deal with the recovery of our client's debts by pursuing any guarantor of the liability and/or pursuing debtors of the client company. We may also act for the administrators of the client company to advise in relation to all aspects of the administration, including making any challenges to antecedent transactions.
  • We provided advice in respect of claims to the available assets of £25m in the liquidation of spreadbetting firm Global Trader. The claimants’ entitlement to assets depended on the Court deciding the complex articulation of the FSA client money rules with the insolvency rules. Along with three major City practices, Mishcon’s was appointed to act to assist the Court in determining the matter in representative proceedings. The case is significant as it is the first time that the Court has had to decide these issues and because it is thought to be a precursor to issues arising in Lehmans.

     

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